Imagine you’ve got an amazing business that is trading through a Trust.
You take out some profit to feed yourself, feed your family, put the kids in school and live comfortably.
But you still have some excess profit left over!
If you take it out, you’ll have to pay up to 49 percent tax.
The purpose of this company is to receive a distribution from your business.
It’s a distribution of profits of your business.
So here’s where the tax savings come in …
Individuals pay up to 49 percent tax, but companies when they’re receiving a distribution from a trust, they only pay 30 percent tax.
So paying that profit to a company instead of an individual will save you 19% tax – 49% minus 30%.
Important: You can’t just do this distribution ‘on paper’.
Then you can use that money to invest in anything else like commercial property, residential property, you can invest in shares with the money in the company.
You may know these company structures by the following names –
I like to think of it as your “Family Vault”.
It’s a smart place to store the profits your business AND reduce the amount of tax you’re paying.
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